Between the ‘Line’s: Paths, Deadlines, Ceilings and Receipts

House GOP Budget Unveiled – On Tuesday, House Budget Committee Chairman Paul Ryan (R-WI) unveiled his fiscal year 2012 budget proposal, titled “The Path to Prosperity.” It is the Republican response to the White House budget released last month. The House Budget Committee will mark-up the bill today in an all-day session with the goal of voting on the House floor next week. House Budget Committee Ranking Member Chris Van Hollen (D-MD) says that Democrats will offer an alternative ahead of the House vote. The Ryan budget aims to reduce debt to 67.5 percent of GDP by 2021. It seeks to accomplish this goal by making steep cuts to non-security discretionary spending and substantial changes to Medicaid and Medicare. It leaves defense spending mostly untouched and makes significant reforms to the tax system without raising additional revenue. In a preliminary analysis of the proposal, CRFB praised it for its debt reduction goal and for undertaking entitlement reform, but called for defense and revenue to be on the table in order to achieve a plan with enough support to be enacted. Stay tuned for more analysis. Ryan's counterpart, Senate Budget Committee Chair Kent Conrad (D-ND), says he is holding off on his budget proposal to give the "Gang of Six" senators that he is a part of more time to develop a bipartisan, comprehensive fiscal plan.

Congress Faces Budget Deadline – While the debate is turning to the FY 2012 budget, Congress has yet to put away the FY 2011 budget. The current continuing resolution (CR) funding the federal government expires on Friday at midnight and further stopgap measures appear unlikely. President Obama summoned negotiators to the White House on Tuesday and promised to do so each day if progress is not made. He also stated that he will not approve another CR without a deal for the rest of the year. Speaker of the House John Boehner (R-OH) upped the ante by asking for $40 billion in spending cuts. So lawmakers face a basic choice: a deal to finance federal operations for the rest of the year or a government shutdown.

Blue Dogs Will Run with a Bipartisan Pack – Leaders of the Blue Dog Coalition of moderate and conservative Democrats on Monday sent a letter to President Obama calling for bipartisan compromise in the negotiations over spending for the rest of this year so that policymakers can move on to “a more serious conversation about the structural issues that plague our nation’s fiscal health.” They state “we believe that it is imperative that both Democrats and Republicans work together and make compromises to avoid a government shutdown.” This could signal that Speaker Boehner will have some Democratic support on a compromise to offset conservative Republicans who may refuse to back anything less than the $61 billion in cuts the House has already passed.

Treasury Details Limits of Avoiding Debt Limit – On Monday, Treasury Secretary Tim Geithner sent a letter to Congress providing the clearest picture yet for when the statutory debt ceiling will be reached and the limited options he has to delay a U.S. default if Congress does not increase the limit. Geithner said the debt limit will be reached "no later than May 16" and that he had authority to take “extraordinary measures” to delay a U.S. default on its debt obligations for only about eight weeks afterwards. He said he will have no more “headroom to borrow” after around July 8 if the limit is not increased before then and pointed out that the high deficit restricts his flexibility to act. Geithner also stressed that “[t]he longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations” and that “[d]efault would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover.”

Lots of Tax Reform Talk – With the April 18 deadline for filing federal income tax returns fast approaching, talk of reforming the tax code is accelerating. The Congressional Joint Committee on Taxation convened a roundtable discussion this morning with former Treasury Secretary James Baker III and former House Minority Leader Dick Gephardt to discuss reforming the tax code. The nonpartisan Tax Policy Center also hosted a tax reform event today examining whether eliminating the numerous breaks in the code will improve the system. Senators Ron Wyden (D-OR) and Dan Coats (R-IN) introduced fundamental tax reform legislation this week that abolishes many of these so-called tax expenditures while lowering tax rates, and the budget proposal from Rep. Ryan also calls for a similar approach, though he is less specific. Next week, the Moment of Truth Project, led by White House Fiscal Commission co-chairs Alan Simpson and Erskine Bowles, will host a tax reform forum in advance of Tax Day. The Fiscal Commission's debt reduction plan also included tax reform that repeals most tax expenditures and lowers rates while raising additional revenue to reduce the debt. See the CRFB paper on tax expenditures here.

Processing Budget Process Reform – As the seemingly endless FY 2011 budget deliberations continue and lawmakers gear up to go through it all again with the FY 2012 budget, fixing the dysfunctional budget process is gaining steam with a variety of ideas being floated. Rep. Mike Quigley (D-IL) recently introduced sweeping legislation to improve transparency in the process. The Senate GOP is rallying behind a balanced budget amendment to the U.S. Constitution, House Republican leaders are considering biennial budgeting, and the Ryan budget also includes some process reforms. The Peterson-Pew Commission on Budget Reform has provided a comprehensive set of reforms to enhance the budget process and advance the setting and implementation of fiscal goals through targets, triggers and transparency.

Tax Receipt Idea Gets Good Reception – One of the ideas promoted by Rep. Quigley and others is a receipt for taxpayers detailing how their taxes are spent by the federal government. The nonpartisan group Third Way has created an online Tax Receipt Calculator that shows an individual where their tax dollars have gone. Along with CRFB’s Stabilize the Debt online budget simulator, it is a useful educational tool to help Americans understand the budget.

Amendments Provide Opportunities – Popular legislation moving through the Senate to renew two small business programs is being used as a vehicle to get votes on a variety of proposals. Several amendments involving fiscal policy will get votes today. One is from Senators Tom Coburn (R-OK) and Mark Warner (D-VA), SA 273, that will call on the federal government to “eliminate, consolidate, or streamline Government programs and agencies with duplicative and overlapping missions” that were identified in a recent Government Accountability Office report.